Are you a contractor? If you work for someone else, it is important to know whether you are working for that person in an employed capacity or in a self-employed capacity as an independent contractor.
Your employment status will determine the charge to tax on income from your employment or self-employment. It will also determine the class of NICs, which are to be paid.
Umbrella Companies employ you for tax purposes and complete central returns for all their contractors. It's less hassle and more flexible for you but take home pay is typically less than that the limited company option.
The best option for you depends on your plans, 'one off' contract or 'contractor for life'? [Read More...]
Running your own limited company can sometimes be beneficial in terms of tax. Any contractor who passes the IR35 test, should consider managing their own limited company.
Increasing net pay is the key benefit when deciding whether to go through all the hassles involved in setting up and running your own limited company.
If you're a contractor who is just getting started, you'll be thinking about how you want to trade. All contractors have to work through a limited company, of some description - 'limited company' status comes in a variety of ways.
There are two ways to trade through a limited company:
An umbrella company is the best method of trading through a limited company for most contractors. Though, for a small minority of contractors, an umbrella company may not be the best option.
Setting up and managing your own limited company could be the right choice for a contractor who passes the IR35 test.
Contractors should do a bit of homework first:
Umbrella companies are easy to understand, especially if you read our guide new to umbrella companies. Just take a little time to read through the basics and stay away from the administration trap that is your own limited company. How to choose an umbrella company.
On balance an umbrella company is by far the simpler option for contracting but you have to think about the bigger picture. If you are contracting long term then the best route is to set up and run your own limited company.
Runinng your own limited company can seem complex and there are a lot of tax requirements, duties and obligations that you must meet but... Compare and use one of the specailist contractor accountants listed on Umbrella Compare and you will simplyfy your experience. Most provide online services and interface with HMRC in a similar capacity to that of an umbrella company. Keep it simple:
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If you are or plan to be a freelance contractor, you must get to grips with IR35. Ignore IR35 and it could cost you thousands!
It's the basics... Compliance with Tax, VAT, PAYE and fiscal arrangements is mandatory for contractors regardless of whether you use an umbrella company or your own limited company.
Incredible then that there are still rogue umbrella companies and limited company accountants who expose their contractors to fraud. Umbrella Compare provides THE solution, we thoroughly vet all umbrella companies and limited company accountants that we list [Read more...].
Umbrella Compare provides a holistic overview of contracting with the aim of helping new and old contractors find the right payroll solutions. Contracting should be about focusing on the contract, not payroll, accounting, HMRC and bureaucracy.